Export strategy and pricing policies in medium-sized manufacturing firms in the north of England with particular reference to the effect of sterling floatation

Abstract

The objectives of this study are to contribute to the understanding of the export process in smaller firms and to provide a benchmark against which export strategy and pricing policies can be assessed, particularly in the context of the impact of floating currencies on exporters. The study consists, firstly, of a literature survey in the fields of pricing and export management, drawing on some 600 sources. Primary data were collected through a small number of depth interviews with export executives and a postal questionnaire survey of 250 medium-sized exporting manufacturers in the North of England, drawn from the Clothing. Furniture, Chemicals and Scientific Instrumentation industries. The theory of export strategy is reviewed, particularly in the context of key market concentration, as the foundation for export policies, including export pricing on which attention is focussed here. Challenges are offered to the arguments and empirical evidence on which the key market philosophy is founded and an alternative strategy proposed: market spreading. Empirical evidence is produced to show the existence of both concentration and spreading strategies in practical exporting, and to assess the underlying logic of market spreading as an alternative to market concentration, together with the situational cues associated with each. From general pricing theory and methods, attention is directed to the more specialised problems of export pricing. Consideration is given to the relationship between domestic market and export prices and pricing methods, and the existence and form of discriminatory pricing in exporting. The emphasis placed on price in the export marketing programme is analysed in the context of the debate on price versus non-price aspects of competition in international markets. Lastly, arising out of export pricing policy is the key issue of pricing currency, particularly as the mediator of the impact of floatation on the exporter. Attention is given to the export invoice currency decision, and the underlying reasons for currency choices as a challenge to the normative theory offered to exporters by the literature, together with the consequent implications of currency movements at the company level.